Apple is failing to dent Android's dominance over iPhone

iOS market share has nearly halved over the last two years and is now in danger of declining to under 10% of all phones globally. Gartner / Business Insider Over the last two years, Apple could not have asked for easier market conditions: The iPhone 6 was a huge hit, and eighteen months later Samsung's phone business collapsed after the disastrous Note 7 launch.

In the last quarter, Apple sold 43 million iPhones compared to 328 million Androids, Gartner says. Android now accounts for 88% of all phones sold. iOS market share is barely above 10% worldwide.

iOS global market share:

Q4 2014: 20.%

Q3 2016: 11.5%

Source: Gartner

It's not just a story of Apple failing to reach a broader market for its high-end devices. It's also a testament to the resilience and popularity of Android. The operating system, given away free to manufacturers as an open-source product by Google, is often criticised by tech insiders for its fragmentation, the low frequency of software updates for users, and its security holes.

And yet the system that tech bloggers love to hate is kicking Apple's butt.

At the end of 2014, when Apple launched the iPhone 6, the new large-screen phablet began eating into Android's share of the market almost immediately. By February 2015, sales of Android devices went into decline for the first time ever— an astonishing defeat for Android, especially given that the product is given away free to manufacturers.

Then, in summer 2016, Samsung's flagship Galaxy Note 7 was launched and then immediately aborted after dozens of the devices suddenly exploded. Samsung's unit sales collapsed 14% year on year in Q3 2016, according to Gartner.

Apple should have been on the verge of a massive global sea change in its favour.

iPhone didn't benefit much from the gap in the market created by Samsung's absence, Gartner's data shows. Instead, Chinese Android manufacturers stepped up their game. China's passion for new Android phones from companies like Oppo, Vivo, and Huawei have cut into Apple's famously high customer retention rates, according to research from UBS.

Here is that same data in the form of percentage market share:

Gartner / Business Insider

From this perspective, the launch of iPhone 6 — which looked like a killer blow to rival phones at the time — now looks like a brief bump in an otherwise downward historic trend.

Of course, Apple has never had a majority market share and it does not want one. Apple sells devices that are among the most expensive, putting them out of reach of most people. Its strategy makes Apple the most profitable smartphone maker on earth. Apple takes 104% of all smartphone profits, globally. (The extra 4 percentage points come from the fact that some rivals sell at a loss.) If Apple were to expand its sales by offering lower prices its profitability — and its stock price — might fall. So Apple likely isn't too bothered that it is not the most popular kid on the block.